Performance in the Maldives tourism industry is expected to firm up during the year despite the current political instability, the country’s central bank has said.

In its annual report, Maldives Monetary Authority (MMA) said the brisk performance of the tourism sector is mostly stemming from the increased number of tourists from the European market, reflecting improved growth prospects for that region. Premised on this positive outlook for the sector, bed nights growth is projected to firm at seven percent this year, it added.

MMA admitted the downside risks of forward booking cancellations following the domestic political tension at the turn of the year. However, overall risks to the sector outlook are broadly balanced, as the high frequency data pointed to the impact being mild, the authority said.

“The projections may even tilt towards the upside if the healthy performance seen in the first quarter of 2018 continues throughout the year,” the report read.

Maldives has attracted a wave of bad publicity following the recent declaration of a state of emergency, which ended in March. However, the political turmoil is strictly restricted to the capital city, away from the resorts and local islands where holidaymakers stay in.

The central bank’s projections are in line with growth trends reported by other authorities as well as independent research firms.

According to official figures released by the tourism ministry, total arrivals for the first three months of the year increased by 17 percent to reach 420,103 compared to the 359,053 in the same period of last year.

Meanwhile, data compiled by leading global market research and analysis firm STR has shown that Maldives posted the highest occupancy level for a Q1 since 2014 thanks to the highest Q1 demand increase in the destination since 2010.

According to STR’s Asia/Pacific hotel performance report for Q1 2018, occupancy in the Maldives during the January-March period stood at 76.7 percent — an year-over-year increase of 7.6 percent. This represents the highest absolute occupancy level for a Q1 in Maldives since 2014 thanks to the highest Q1 demand increase in the country (10.6 percent growth) since 2010, it said.

STR data also showed that Average Daily Rate (ADR) in the Maldives increased by 1.6 percent to MVR 12,569.93 (USD 815.10) in Q1, while Revenue Per Available Room (RevPAR) in the destination also recorded a 9.4 percent growth to reach MVR 9,637.91 (USD 624.97) during the first three months of the year.

Over the past five years, dozens of uninhabited islands have been leased to local and foreign resort developers. Several international brands have entered into the market, increasing the number of resorts to 120. That number is set to increase as the government has announced the opening of some 20 new resorts over the next two years.

Along with the new resort openings come the challenge of increasing demand from budget travellers who choose guesthouses over luxury resorts that the Maldives is known for. The guesthouse sector has rapidly expanded with over 450 guesthouses in operation today.

The government has announced new steps to maintain a structured growth in tourism, including a slowdown in leasing islands for resort development and increased marketing efforts in key markets such as China and the Middle East in order to reach an ambitious target of a record 1.5 million tourist arrivals this year.